ML Mac sells remaining crop
ML Macadamia Orchards LP, the world's largest grower of macadamia nuts, said yesterday top buyer Mauna Loa Macadamia Nut Corp. will more than double its nut purchase agreement during the next year.
Mauna Loa, owned by Hershey Foods Corp., will purchase an additional 9 million to 12 million pounds of wet-in-shell macadamia nuts between next week and June 30, 2009, at 60 cents a pound. The addition brings the total amount of nuts purchased by Mauna Loa to between 15.3 million and 18.3 million nuts in the coming year, or as much as 87 percent of ML Macadamia's annual production of 21 million pounds.
Mauna Loa entered into an agreement in 2006 to purchase 6.3 million pounds of nuts annually from ML Macadamia for a period of five to six years.
The company also sells between 4.5 and 5.5 million pounds of nuts a year to MacFarms of Hawaii LLC, the second-largest macadamia nut processor and marketer in the state, and 2 million pounds annually to Island Princess Macadamia Nut Co. under five-year agreements that started last year.
The additional purchase agreement includes 6 million pounds under contract to Hamakua Macadamia Nut Co., which the company has refused to purchase. Earlier this year, ML Macadamia sued Hamakua in Hilo Circuit Court for allegedly breaching a December 2004 purchase agreement for 6 million pounds of nuts a year from 2007 through 2012.
"The main thing is that we found a home to sell all our nuts," Dennis Simonis, president and CEO of ML Macadamia, said in an interview. "The market is improving quite a bit. We had a glut of macadamia nuts 12 to 18 months ago, now the market's tight and prices are getting better, so it is a good sign for the growers."
Simonis said he expects to see a positive impact on fiscal third and fourth quarters, which fall during the heaviest part of harvest season.
In its quarterly regulatory filing in May, ML Macadamia said the average price paid for the nuts delivered to MacFarms and Island Princess was 49 cents in the first quarter of 2008 compared to 61 cents a pound in the first quarter of 2007. The average price for nuts delivered to Mauna Loa was 75 cents a pound, and will rise by a penny this year. The company estimated contract prices for the second half of this year for the MacFarms and Island Princess contracts at 55 cents.
Also, ML Macadamia said it has increased its revolving credit facility with American Ag Credit to $6 million from $4.5 million, expiring July 10, 2009.
